Significant/key support and resistance levels?

[Bordux]

Hello traders. I've stumbled across the term "key/significant s/r levels" while reading some educational material about price action trading. I'm not entirely sure how do you define these key s/r areas? Hope someone can clarify this for me.

EDIT: I'll rephrase the question; what criteria is used to measure the strength of support/resistance level?

 

[SameenP]

Hello traders. I've stumbled across the term "key/significant s/r levels" while reading some educational material about price action trading. I'm not entirely sure how do you define these key s/r areas? Hope someone can clarify this for me.

EDIT: I'll rephrase the question; what criteria is used to measure the strength of support/resistance level?

Hello, Support and resistance level reflects the battle between the bulls and bears in the market. It is the range where law of demand and supply come into play. To measure MAJOR support or resistance level we should first go into the daily or weekly charts. And for INTRADAY levels we can look over 15min or 30 min charts. In case of major support or resistance we might see large divergence from the current trading price whereas in case of intraday there will little difference. However, Target price will remain the same in both the cases. There are various ways to set these levels, like, if we see a gap down in prices then the last price before that gap will be the resistance, this is called Gap-pullback strategy. Or if prices breach one support level then automatically that level becomes our resistance.
Blow off tops or panic selloffs can put tops and bottoms into markets and mark important support or resistance levels for a stock.
We can also use Fibonacci retrenchment and Pivot points which directly reflect different support and resistance levels. Many traders also use trend lines and other technical indicators such as the RSI, slow stochastic, moving averages, and CCI to derive logical levels of support and resistance in a stock.

 

[downtrend]

Try to check line chart of daily time frame, draw lines or every turning point, then change to candlestick chart and fine tune these levels. Don't mark too many levels on your chart. A level above and a level below current price is enough to pick any trading signal from them.

 

[EuroTrader]

Try to check line chart of daily time frame, draw lines or every turning point, then change to candlestick chart and fine tune these levels. Don't mark too many levels on your chart. A level above and a level below current price is enough to pick any trading signal from them.

When we are utilizing the Daily charts we get to know about the trading and also we can know what are the Support and Resistance levels we need to make use of